A client has earned large sums of money in the last tax year and has deposited most of it in a bank account attached to her off-set mortgage. Therefore she hasn't earned interest as such, but she has saved on (domestic) mortgage interest.
Hi
So hows about an intro before we start. We always ask newbies!
Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, are you a bookkeeper or accountant, what qualifications, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
regardless of the posters absence and just for you me ol matey, the answer is no. You do not need to account for interest unpaid in this instance. The client will (should) have paid tax on the money earned, what they do with it after that in using the funds to their best advantage is down to the taxpayer and HMRC cannot tax a taxpayer on legitimate interest reduction planning, only on interest earned.
Now, you might have noticed in the above those magic words "in this instance". A possible linked question in peoples minds may be what about where someone (say) works in the financial services sector and has reduced interest rate mortgages available to them. In such instance the reduced interest is a taxable perquisite on the difference between the interest charged and the interest that would have been charged on the same product if sold to the general public.
I know, I just went and answered another question that wasn't asked but I just figured that someone at some time might read my original answer and think ooh, interest saved is never taxable. Which of course, as demonstrated is not a completely true statement.
Ooh, its snowing... And its sticking... Enough of this accountancy stuff, I'm off to build a snowman
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Morning boys.
There is of course, in this instance, with this type of financial product, the question of how the hell you would work it out, given the banks don't (usually) provide a split.
Preferential interest rates or staff rates in financial services sector is almost a thing from the past, bit like final salary pensions (so if you go back to that Shaun, make sure you factor that into your negotiations!)
It's snowing here as well. Not enough yet for a snowman.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
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